Since it’s mid-January, the “new year, new you” posts on social media have started to taper off. But that doesn’t mean you have to give up on your physical or fiscal fitness goals!

Personally, I’m trying to be more active. It was much easier in college when I had more free time and had regularly scheduled swim practices, weight lifting sessions, and a built in support group from my teammates. Prior to having kids, I laced up my shoes on a regular basis, ran half marathons, and even ran one full marathon. When I was training for a half marathon, I had to stick to regularly scheduled runs to be sure I was ready for race day. Now that we have two little ones running around our house, it’s harder for me to stay motivated and work out.

Yes, I’m self-employed and have the ability to set my schedule (and therefore, workout schedule) but this sort of mindset shift after 9 years in the corporate world takes a little time to achieve. It takes time to develop new habits.

After reading Alexandra Franzen’s post about the six types of motivation, my motivation to stay active is linked to achievement, growth, and perhaps a sprinkle of social factors. I love tracking my progress and seeing improvement over time. And yes, sometimes I need an external push to get moving.

So I asked for a Fitbit for Christmas. I wanted a way to measure my current activity and then track my improvement over time. I also needed the friendly reminder to get off my butt and take a little walk if I’d been sitting at my computer for too long.

What the heck does this have to do with financial planning?

Tracking my fitness with a Fitbit reminds me what it was like when we first started tracking our finances with Mint years ago. I had a vague idea that I needed to get off my butt, but I had no idea how few steps I was taking some days. I knew I was tired, but I had no idea how little I slept some nights.

When it came to our finances, the account balances seemed to move in the right direction, but I had no idea how much I was spending on coffee or eating out for lunch. We were saving for a down payment on a house and needed help plugging some of the financial leaks. Now that we have about six years of financial data, we can see how much we’ve progressed by tracking changes in our net income and, more importantly, net worth.

Beyond monitoring physical activity or financial progress, it’s so important to set clear, SMART goals: specific, measurable, attainable, realistic, and timely. Because if you don’t know where you’re going, how are you going to get there?

As a financial planner, I can help you create and prioritize multiple SMART goals aligned with your values. We’ll work together to figure out your motivation style so you can achieve these goals. And along the way, I’ll provide the accountability and assistance you may need through emails and regularly scheduled calls or meetings. I can help you with those adult responsibilities that you know you should do like creating a debt repayment plan, updating beneficiaries, creating an estate plan, or rebalancing asset allocations, but keep putting off

My goal as a financial planner is to help you feel more confident when it comes to your money.

Are you looking to end your financial year on a high note? You’re in luck because there’s still time to make a few last minute financial moves before the ball drops on New Year’s Eve. And even a few that you can take advantage of in 2017 for the 2016 tax year. Some of these moves will save you some money on your 2016 tax bill while others will set you up for a more profitable new year.

Max out 401(k) contributions

There are still one or two paychecks left in the year to max out or contribute juuuust a little more to your employer’s 401(k) plan. So if your budget can swing it, log in to your 401(k) account and bump up your contribution through the end of the year. For 2016, you can contribute up to $18,000 or $24,000 if you’re 50 or older.

Entrepreneurs also have time to contribute to a retirement account

Solo business owners (or a business owner with a family member as their business partner) have until the end of the business tax year to establish a Solo 401(k). They then have until their tax filing deadline (plus extensions) to make any contributions:

Elective deferrals of up to 100% of earned income up to a maximum annual contribution of $18,000 in 2016, or $24,000 in 2016 if age 50 or over; plus

Employer non-elective contributions up to 25% of compensation, with total contributions not to exceed $53,000 for 2015 and 2016.

Note that these elective deferral limits apply per person, not per plan. So if you’re also participating in another employer’s 401(k), say if you’re starting your business while still employed at a corporate job and making 401(k) contributions to take advantage of an employer match, these will count against the limit for employee contributions to an individual 401(k) or SIMPLE IRA.

As for SEP IRA’s, business owners have until their tax filing to establish and make a contribution to that type of retirement account. A SEP IRA is like a traditional IRA, but it is funded solely by employer contributions. A business owner sets up an IRA for each qualifying employee and can contribute up to 25% of each employee’s pay (and 25% of net self-employment income). Annual contributions are limited to the smaller of $53,000 or 25% of compensation for 2015 and 2016. There are no “catch-up” contributions like the solo 401(k). The SEP IRA is a great option for those who do not qualify for a solo 401(k), or who have employees and are looking for a retirement plan for their company.

Max out Traditional or Roth IRA contributions

Another way an individual with earned income can start saving for retirement is by contributing to a Traditional or Roth IRA. You have until April 15, 2017 to make a contribution for the 2016 tax year. For 2016, individuals can contribute up to $5,500 ($6,500 if you’re age 50 or older) or their taxable compensation for the year, if their compensation was less than this dollar limit. However, a Roth IRA contribution might be limited based on tax filing status and income.

Roth IRAs are great because you can withdraw your money tax-free when you’re in retirement. Or you may want to contribute to a traditional IRA and get an income tax deduction. However, that deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels. Review the IRS guidelines for more details.

Convert a Traditional IRA to a Roth IRA

If you’re in a lower tax bracket now than what you expect in the future (i.e. you were unemployed for part of the year or started a business this year and expect income to grow next year), it might be a good time to convert an old 401(k) or traditional IRA into a Roth. That means you can capture lower taxes today and withdraw that money from your Roth tax-free when you’re in retirement. Make sure the amount you convert keeps you in a low tax bracket.

If it turns out that your income didn’t change the way you expected in the following year, you can reverse a Roth IRA conversion, also know as recharacterization. The recharacterization needs to be completed by the last date, including extensions, for filing or refiling your prior-year tax return, which is typically on or about October 15. You can generally recharacterize all or a portion of what you converted.

Take required minimum distributions

This isn’t usually an issue for my client base since required minimum distributions apply to folks over 70 1/2 with employer retirement plans (if you’re retired) and traditional IRA’s. But this may apply to you if you inherited a retirement plan as a non-spouse beneficiary. The annual deadline to take required minimum distributions is December 31. Make sure you get this done because the penalty is 50% of the required minimum distribution.

Sign up for a class from an accredited school

The lifetime learning credit can cut your tax bill by up to $2,000 a year (20% of tuition up to $10,000), depending on your income. This credit is available for all years of postsecondary education and for courses to acquire or improve job skills. To claim the credit for 2016, need to register and pay for the class by the end of the year and start the class by March 31, 2017.

And while continuing education by an accredited school to maintain a professional license is eligible, if you’re self-employed, you might be better off claiming your education expense as a business deduction.

Unfortunately, couples filing as married filing separate are not eligible to take the credit. Same for couples filing jointly with modified adjusted gross income of $130,000 or more or individuals filing as single, head of household, or qualifying widow(er) with modified adjusted gross income of $65,000 or more.

Take advantage of tax loss harvesting

If you sold some investments at a gain during the year, you can offset this by selling other poorly performing investments at a loss. As explained by the IRS, “Capital gains and losses are classified as long-term or short-term. If you hold the asset for more than one year before you dispose of it, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term. To determine how long you held the asset, count from the day after the day you acquired the asset up to and including the day you disposed of the asset.”

If your capital losses exceed your capital gains, the amount of the excess loss that you can claim to lower your ordinary income is the lesser of $3,000, ($1,500 if you are married filing separately) or your total net loss shown on Schedule D. If your net capital loss is more than this limit, you can carry the loss forward to later years.

And while you’re reviewing your investments, take a moment to review your current asset allocation and rebalance them to match your target allocation.

Spend your FSA dollars

If you’ve contributed to a flexible spending account through your employer benefit, make sure you spend those dollars by the end of the year. While some plans have a grace period and may let you carry over some money into 2017, others are “use it or lose it.” Here’s a great listing of eligible healthcare FSA expenses.

Accelerate next year’s tax deductions

If you had unusually high income in 2016 (maybe you won the lottery, earned a large bonus, or sold a business), consider accelerating some of next year’s deductions: prepay your January mortgage payment for the mortgage interest deduction, property taxes, professional dues or subscriptions.

And while some business owners might make some last minute business purchases to offset income, it’s not a dollar for dollar benefit on their ending tax bill. So make wise decisions when it comes to these additional business expenses.

Donate to your favorite charity

Parts of the tax code are designed to encourage certain behaviors. Deducting charitable contributions on your tax returns is just one example. So if you’re feeling particularly generous (and yes, want to lower your taxable income), you have until December 31 to make a donation to your favorite eligible charity.

Contribute to a college savings fund

If you’ve maxed out your retirement savings for the year and want to save for your child’s college education, there’s still time to contribute to a 529 plan. You won’t get a benefit on your federal tax return, but there are tax benefits for some states. Individuals can contribute up to $14,000 ($28,000 for married couples) per student each year, or up to $70,000 ($140,000 for married couples) prorated over a five-year period to someone’s existing account, without incurring a federal gift tax.

Reflect on your finances

Now’s the perfect time to reflect on your finances. Also take a few moments to review your budget, insurance coverage, your estate plan, and account beneficiaries. This is also a great time to make personal and business goals for the upcoming year.

Whether you voted for Hillary Clinton, Donald Trump, a third-party candidate, or wrote in a candidate like Santa Claus a la my three year old daughter, it looks like Donald Trump is going to be our president for the next four years.

What does that mean for you an American investor? Someone who has big goals? Right now, nobody really knows. There have always been times of turmoil and uncertainty. And yes, sometimes the market will dip. But as I shared on social media, the only thing you can control is yourself.

You can control your financial plan and whether you stick with it or not.

You can control how much you’re saving for those big and little financial goals.

You can control your spending and whether you’re getting in or out of debt.

You can control your investment choices and how much risk you want to take.

You can control whether you stick with a traditional employer or start your own business.

If you don’t like the results of yesterday’s election, you can control who you vote for over the next for years for state and local offices.

Are you a little overwhelmed by everything? That’s OK. That’s why I’m here.

As your trusted advisor, I want to give you a sense of comfort. Let’s work through those scary thoughts. Let’s capitalize on the things you can control and try to minimize the things you can’t.

As Carl Richards of Behavior Gap illustrates, an advisor stands between you and a big financial mistake. “We all get greedy when everyone else is greedy and fearful when everyone else is fearful,” Richards said. “And there’s good reasons for it. That type of behavior has kept us alive as a species but it’s terrible for us as investors.”

Nobody knows how the tax laws or economy will change, but we can work together to plan for what we do know and makes some educated assumptions (guesses, really) about how the future will look. When things (yes, including your goals) change, we’ll just adjust your strategy. I’m here to help you make decisions when your guess is wrong.

If you want to talk about your anxieties,

If you want to take control of your financial situation,

If you want to start planning for a brighter future, I’d love to talk with you.

Let’s hop on the phone for 30 minutes to get acquainted. We’ll talk about your most pressing financial question and then we’ll discuss ways we can work together:

As a kid, I loved going back to school. There were new things to learn. New supplies. New teachers. New beginnings.

As an adult, this time of year is also my mini “New Year’s Day.” While I don’t write New Year’s September resolutions, I have a track record of starting new things around this time of year: getting married, moving to Chicago, and starting businesses.

While I inadvertently took the summer off from updating this blog and my newsletter (oops), I figured most of you were out enjoying the summer sun as well. Perhaps you put some of your travel fund to good use.

Now that you’re getting back to a regular routine, it’s the perfect time to check on your finances and do a little tax planning. It’s far enough along in the year to have a decent forecast of your income, expenses, and saving for the rest of the year. At the same time, you still have a little room to make some changes before the end of the year.

Here are a few items to consider:

Think about your financial goals from the beginning of the year. Are you beating them or falling short? There’s still time to change withholdings and contributions to retirement, investment, or savings accounts. Or if you haven’t opened a retirement account, why not do it now? I can help.

If you’re falling short on your income goals, do you need to pick up a side hustle to make it through the end of the year?

Have your priorities or values changed during the year? How does your spending align with your priorities?

Does a change in priorities motivate you to start a business? Or perhaps stay home with your kids? Do you have an emergency fund in place to make the change?

Have you reviewed your bills lately? Our cable and Internet bill ballooned once the promotional period ended and a quick call to our provider lowered our bill by $66 per month.

Do you need to update beneficiaries if you have a new child? How does this affect your life insurance coverage? Have you updated your estate plan?

If you have kids, it’s the start of a new school year. That may mean new tuition costs or activity fees. Or maybe your kids are going to daycare or preschool for the first time. Have you updated your budget for the change in cash flows?

If you’re self-employed, it’s a great time to evaluate your pricing, packages, and product or service offerings. It may be time to phase out underperforming products or increase pricing on others.

With Christmas approximately three months away, are you saving enough for holiday spending? This includes gifts as well as travel and parties.

Finally, it’s a good idea to review your credit report annually. You can also monitor your credit score and credit report through Credit Karma.

And in the spirit of sharing new beginnings, I wanted to keep you in the loop of my most recent endeavor: Brightwater Accounting, the tax and accounting sister business of Brightwater Financial. While not everyone thinks they need a comprehensive financial plan, everyone needs to file their taxes. And if you run a business, there’s no hiding from the numbers.

As a CPA, I love working with numbers and I’m uniquely qualified to provide accounting, tax planning, and tax preparation services to you and your business. Let me take care of the books so you can focus on your business.

And as your CPA and trusted advisor, I’m in the unique position to understand the details of your financial situation. At the same time, I can help you see the big picture and provide objective recommendations so you can make informed decisions. Managing your finances becomes simpler, clearer, and more effective.

If you’re interested in learning more or working through any of the items listed above, let’s hop on a call!

Your complementary 30-minute strategy session includes: A quick assessment of your current financial situation and goals, a discussion of your most pressing financial question, and a discussion of options available.

I’ll also share an action step you can take immediately to improve your current situation.

One of the biggest struggles I hear from freelancers and entrepreneurs is how to budget with variable income. Some expenses like rent are fixed, yet their monthly business income is not. Sure, you can always sign an additional client, but there are only so many working hours in the day. And slow months happen, whether intentionally or unintentionally. On top of that, business owners are dealing with two budgets: their personal and business budgets.

Before you start thinking about income goals and pricing, it’s important to determine the bare bones budgets for your personal finances and business. Or as Kim Vargo of Yellow Brick Home calls it, your “spaghetti number.” On the personal side, these are your nonnegotiable expenses: rent/mortgage, utilities, insurance, groceries, etc. On the business side, this might include website hosting and registration fees, service fees when invoicing a client, computer software, or legal and professional fees. We’ll add savings, retirement, and taxes later.

If you’re not sure about your spending, I recommend creating an account with mint.com. Mint is a free and secure online money management and budgeting tool. You can even create separate personal and business accounts using two different email addresses. Simply link up your checking, savings, credit card, retirement, and debt accounts to see your financial picture all in one place.

Once you’ve calculated your minimum personal and business expenses, you have your bare minimum income goal for each month. From here, it’s time to layer on savings, retirement, and taxes.

While there are as many spending/savings plans as there are diets, the “50/20/30 Plan” keeps things fairly simple: 50% Needs, 20% Savings, and 30% Wants. Your bare bones personal and business budgets are the 50% Needs. The 20% includes saving, retirement, and investing goals. The last 30% for Wants includes hobbies, eating out, and other lifestyle choices. If you have debt payments, include those in the “Savings” bucket.

But what about taxes?

Saving for Taxes

If you’re an entrepreneur, your income is mostly likely pre-tax dollars. That means when tax time rolls around, you are responsible for your personal income taxes and self-employment taxes (Social Security and Medicare taxes). Therefore, it’s extremely important to set aside your tax dollars with each paycheck.

Depending on your personal situation (whether you’re married or single) and which state you live in, you’ll pay somewhere between 20% to 30% of your total income in taxes. Here’s how it breaks down:

Social Security tax – 12.4%

Medicare tax – 2.9%

Marginal tax rate – 10%

Note: The marginal tax rate usually starts at 10% and increases as taxable income increases.

BASE TOTAL = 25.3%

Therefore, I recommend saving at least 20% for taxes. Save 25 to 30% of your pre-tax business income to be safe.

As for where to save your money, I recommend opening a separate bank account just for your taxes. FDIC-insured online banks like CapitalOne 360 or Ally Bank have no minimums or fees. Additionally, they offer a higher yield than traditional savings accounts.

As a business owner, you are also responsible for paying quarterly estimated taxes. If you don’t, you’ll be responsible for a failure to pay penalty (and likely interest and fees) when you file your tax return. You can estimate your quarterly taxes using an accounting program like QuickBooks Self-Employed, this online self-employment tax calculator, or by working with your accountant, like me!.

You’ll need to know your gross income and total business expenses for each month. Take your gross monthly income, less your total business expenses, and multiply this figure (your net business income) by 20% to 30% or whatever you think is the closest to your tax rate.

Since every financial situation is different, consult with and create a personalized tax plan with your accountant, like me!

I previously shared that it’s more important for parents to have an emergency fund in place, pay off debt, and save for their own retirement before thinking about saving for college. It’s the same advice when flight attendants tell you to put on your own oxygen mask before taking care of others.

An emergency fund is money set aside to cover the unexpected: the cost of trips to the emergency room, vet bills, major car or house repairs, or living expenses while looking for a new job. If you’re a freelancer or entrepreneur, your emergency fund may also cover slow periods when you’re working less and therefore earning less. Or if you’re starting a new business, an ample emergency fund can cover the income gap while getting your business off the ground.

A December 2015 survey by Bankrate.com found that about 63 percent of Americans say they’re unable to handle an unexpected expense like a major car repair or emergency room bill of around $1,000. Do you have enough in savings in case a you’re surprised by a big bill? And even if you have the appropriate health, renter’s or homeowner’s, car, and disability insurance to cover certain unexpected expenses, you still want to have enough in savings to cover any deductibles.

One rule of thumb is to save 3 to 6 months of living expenses, but several factors impact the amount you may need in your emergency fund:

How many people depend on your income? The more people relying on your income, the more you’ll want to save, particularly if you’re in a single-income household.

How variable is your income? If you’re a freelancer, you may want to save 6 to 12 months of living expenses to cover slow periods, as well as the unexpected.

How stable is your job? Do you work in an industry or city where it’s easy to find a new one?

If you were to be laid off, are you eligible to receive severance pay?

Do you have other revenue streams, like a side business, you can rely on?

What’s your risk tolerance? In other words, how much money do you need to have set aside to feel comfortable?

Where to Keep Your Emergency Fund

As for where to keep your emergency fund, you want the money to be somewhere liquid, accessible, and safe. It’s good to keep at least a portion of it in a checking or savings account so you can access the funds immediately. Then, I like to keep a portion in an online savings account like Ally Bank or CapitalOne 360. The returns are slightly better than a traditional brick-and-mortar savings account, but you usually have to wait a few days for the money to transfer to your external checking account. To minimize the risk, make sure your checking or savings account (up to $250,000 per depositor) is insured by the FDIC.

For a safety net to cover longer term situations like a job loss or medical condition, you can keep a portion in an online savings account and then invest a portion in a low- to moderate-risk brokerage account. While a savings account is safe, they’re not truly risk-free since current interest rates are below 1% and you’ll most likely be losing money over time to inflation. Investing in an online brokerage account like Betterment or Vanguard will offer better returns while still being fairly accessible. Electronic withdrawals to your bank generally take 4-5 business days due to the required sale and settlement of securities. And fingers crossed you won’t need to tap into your longer term safety net!

Get Started!

If saving 3 to 6 months of living expenses seems daunting, work towards saving one month of expenses. Then create monthly automatic transfers to your emergency fund until you reach 3 to 6 months of living expenses. If your income varies, allocate your savings based on percentages instead of dollar amounts. For example, make it a goal to set aside 5% of every client payment for your emergency fund. This will automatically help you save more dollars when your income is higher and keep you from overextending yourself during leaner months. Or if you can super charge your savings by depositing a portion of your tax refund or annual bonus into your emergency fund.

Once your emergency fund is in place, then you can start thinking about eliminating debt, saving for retirement, and saving for other personal goals (i.e. buying a house or traveling).

This week marks the fifth annual Women’s Money® Week and today is International Women’s Day. Most people are aware of the wage gap between men and women, but the relationship between women and money is more than just that. Women are grossly underserved in the financial world and this is one of the reasons why I founded Brightwater Financial. According to Women’s Money®:

2/3rds of household breadwinners and co-breadwinners are women/moms. Our country’s economic future relies on the financial stability and success of household breadwinners. Did you know that if women were paid the same as men for the same job, we would reduce poverty in America by 50%!

Reducing poverty by 50% is huge! Unfortunately, the 2010-2011 Financial Experience & Behaviors Among Women research study by Prudential found that “fewer than two in 10 women feel “very prepared” to make wise financial decisions. Half indicate that they “need some help,” and one-third feels that they “need a lot of help”.”

When I asked a group of local working moms, many who are self-employed, about their money and financial planning questions, the very first question was around saving for retirement:

When I left my corporate position to become self-employed, I sacrificed contributing to a [company-sponsored] 401(k). I know I could pursue a self-employed 401(k), but I have no idea how that works. I don’t get matching now and it makes me wonder if it’s even worth it. My husband is saving to his. Do I need to resume, too? So, my question would be – do you recommend any options? Is there a bare minimum someone should save?

How Much to Save

Since there are no loans for retirement, let’s start with how much to save. When creating a budget, the “50/20/30 Plan” keeps things fairly simple: 50% Needs, 20% Savings, and 30% Wants. Your bare bones personal and business budgets are the 50% Needs. On the personal side, these are your nonnegotiable expenses: rent/mortgage, utilities, insurance, groceries, etc. On the business side, this might include website hosting and registration fees, service fees when invoicing a client, computer software, or legal and professional fees. The 20% includes saving, retirement, and investing goals. The last 30% for Wants includes hobbies, eating out, and other lifestyle choices. If you have debt payments, include those in the “Savings” bucket.

One quick rule of thumb is that you need to invest and save 25 times your annual expenses to cover retirement. Once you’ve calculated your 50/20/30, compare your current monthly savings to this goal to ensure you’re saving and investing enough. The spreadsheet in this blog post will help you do the math.

If there’s a disconnect between your target and actual savings, how will you bridge the gap? As an entrepreneur, should you be charging more? If so, think about ways you can you add more value to your services. Can you take some classes to improve your skills? If you need to take on additional projects, is it possible to outsource some of the administrative tasks so you can spend more hours performing revenue generating work? Or will you need to decrease some of your expenses?

Where to Save

Traditional or Roth IRA

One way an individual with earned income can start saving for retirement is by contributing to a traditional or Roth IRA. Individuals have until April 18, 2016 (usually it’s April 15) to make a contribution for the 2015 tax year. For 2015, individuals can contribute up to $5,500 ($6,500 if you’re age 50 or older) or their taxable compensation for the year, if their compensation was less than this dollar limit. However, a Roth IRA contribution might be limited based on tax filing status and income.

Roth IRAs are great because you can withdraw your money tax-free when you’re in retirement. Or you may want to contribute to a traditional IRA and get an income tax deduction. However, that deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels. Review the IRS guidelines for more details.

Also, if you’re a new business owner, you may find yourself in a lower tax bracket than when you were at your corporate job. That means it might be a good time to convert an old 401(k) or traditional IRA into a Roth. That means you can capture lower taxes today and withdraw that money from your Roth tax-free when you’re in retirement.

If you have more money to contribute to retirement than $5,500 ($6,500 if you’re age 50 or older), then you may want to invest in one of the following retirement accounts.

The Solo 401(k)

The Solo 401(k) is a traditional 401(k) plan covering a business owner with no employees, or that person and his or her spouse. A business owner can make the following contributions:

Elective deferrals of up to 100% of earned income up to a maximum annual contribution of $18,000 in 2015 and 2016, or $24,000 in 2015 and 2016 if age 50 or over; plus

Employer non-elective contributions up to 25% of compensation, with total contributions not to exceed $53,000 for 2015 and 2016.

Note that these elective deferral limits apply per person, not per plan. So if you’re also participating in another employer’s 401(k), say if you’re starting your business while still employed at a corporate job and making 401(k) contributions to take advantage of an employer match, these will count against the limit for employee contributions to an individual 401(k) or SIMPLE IRA.

And keep in mind that a solo 401(k) plan is generally required to file an annual report on Form 5500-SF if it has $250,000 or more in assets at the end of the year. A solo 401(k) with fewer assets may be exempt from the annual filing requirement. And your solo 401(k) must be set up by December 31st and funded by your tax return due date in order for contributions to apply for that year.

Simplified Employee Pension Plan (SEP IRA)

A SEP IRA is like a traditional IRA, but it is funded solely by employer contributions. A business owner sets up an IRA for each qualifying employee and can contribute up to 25% of each employee’s pay (and 25% of net self-employment income). Annual contributions are limited to the smaller of $53,000 or 25% of compensation for 2015 and 2016. There are no “catch-up” contributions like the solo 401(k).

The SEP IRA is a great option for those who do not qualify for a solo 401(k), or who have employees and are looking for a retirement plan for their company. Business owners just need to file a form with the IRS (Form 5305-SEP) and open a SEP IRA at a bank or financial institution.

Savings Incentive Match Plan for Employees (SIMPLE) IRA:

A SIMPLE IRA is a retirement plan available to any small business with 100 or fewer employees that doesn’t currently maintain any other retirement plan. It’s a great starter plan that encourages contributions by employees. The plan is funded by employee salary reduction contributions and/or employer contributions.

Employees can decide how much they’d like to contribute, up to $12,500 in 2015 and 2016. Employers have two options:

Match up to 3% of each eligible employee’s compensation (which can be reduced to as low as 1% in any two out of five years). The amount, however, can’t exceed $12,500 ($15,500 for employees age 50 or older, applies to both the 2015 and 2016 tax years); or

Contribute 2% of each eligible employee’s compensation. The amount, however, can’t exceed $5,300 in either the 2015 or 2016 tax years.

How to Choose

Which tax-advantaged retirement plan should you use? That depends on the nature and size of your business (are you solo or have employees?). Additionally, you need to consider your tax filing status, age, and participation in other retirement plans. And since some plans require more administrative and fiduciary responsibilities, you may want to chose one retirement plan over another due to simplicity. If you need help deciding which plan is best for you, I’m happy to discuss your retirement planning needs in more detail.

Pay Yourself First!

Finally, in order to reach your financial goals, you need to pay yourself first. This is important even if you aren’t a business owner! You can achieve this by setting up automatic transfers to your savings, retirement, and/or investment accounts. As an entrepreneur, your income may vary, so allocate your savings based on percentages instead of dollar amounts. For example, make it a goal to set aside 5% of every client payment. This will automatically help you save more dollars when your income is higher and keep you from overextending yourself during leaner months.

When I talk with parents about their biggest financial concerns and goals, saving for college inevitably comes up in the conversation. And I understand why college savings is on their minds. The average 2015 graduate will have to pay about $35,000 back in student loans and about 70% of 2015 college graduates left school with student debt, as shared in this Wall Street Journal article. Yeesh! Not to mention the results of this college cost calculator can be a little depressing.

Before we even start talking about college savings, I remind parents that while saving for their child’s college education is extremely generous, it’s more important to have an emergency fund in place, pay off debt, and save for their own retirement first. There’s no guarantee their child will go to college, but I’m pretty sure they’ll want to retire one day. Plus, students have several options in paying for their college education: student loans, work-study programs, scholarships, community college and then 4-year school, etc.

So if you’re ready, here are several ways to start saving money for college:

529 Plan

One of the most popular ways to save money for college is through a 529 plan, named after Section 529 of the Internal Revenue Code. The 529 plan is a tax-advantaged savings plan sponsored by states, state agencies, or educational institutions. Earnings on withdrawals for qualified higher education expenses are exempt from federal and state taxes. Additionally, if you invest in the state 529 plan where you are a resident, there may also be a state tax deduction (subject to recapture under certain circumstances, check your plan document to be sure). There are two types of 529 plans: college savings plans and pre-paid tuition plans. This chart from FINRA does a great job comparing the two:

Spoiler alert: We live in Illinois and chose to go with Bright Start, an Illinois 529 college savings plan. Bright Start is a bit more DIY, in comparison to Bright Directions which is an Illinois 529 plan available through investment professionals (which has higher fees). Another option is to invest in a 529 plan from another state (for example, Vanguard has a 529 plan through Nevada), but then you may lose any of your state’s tax advantages. This is a nice summary of state income tax 529 plan deductions.

Another benefit of the 529 plan is that anyone (parents, grandparents, other relatives, etc.) can contribute to the plan up until the account value reaches the state determined limit. In Illinois, that’s $350,000 per child. And this is a nice summary of gift and estate tax benefits in doing so (as of the 2015 tax year):

Contribute up to $14,000 ($28,000 for married couples) per student each year, or up to $70,000 ($140,000 for married couples) prorated over a five-year period to someone’s existing account, without incurring a federal gift tax.

Grandparents, relatives and friends can open their own 529 plan for a student, contribute $14,000 ($28,000 for married couples) per student each year, or up to $70,000 ($140,000 for married couples) prorated over a five-year period, and not incur a federal gift tax.

Contributions to 529 plans are also excluded from an account owner’s estate when taxes are assessed.

Some parents are concerned about the penalties if the funds aren’t used for college since any earnings you withdraw from a 529 plan that aren’t used for qualified higher education expenses are subject to both taxes and a 10% penalty (the amount you’ve contributed is never subject to either). If you have multiple children, you can always change the account beneficiary. So if Sibling A doesn’t go to college, you can designate the funds for Sibling B’s use.

Additionally, if your child receives a scholarship then you can typically withdraw up to the amount of the scholarship from your 529 without incurring any penalty. You’ll still have to pay taxes on the earnings, but avoiding that 10% penalty helps.

Either way, opening a 529 plan is relatively simple, so I recommend going with a direct-sold plan as opposed to an advisor-sold plan since those can cost thousands of dollars more over time due to the higher commissions and fees. If you do need help setting up a 529 plan, work with a fee-only or hourly financial planner (like me!) who will give you unbiased advice and help you enroll in the direct option that is best for you.

Coverdell Education Savings Accounts

Another tax-advantaged way to save for college is with a Coverdell Education Savings Account (ESA). Like the 529 plan, earnings in ESAs are tax-deferred and contributions are not deductible at the federal tax level. However, there is no state income tax deduction available for ESAs. And when it comes time to pay for education, withdrawals from an ESA that are used for qualified education expenses are tax-free. Notice that it doesn’t say qualified higher education expenses. One of the advantages of an ESA is that the funds can also be used for private elementary and high school expenses, in addition to college. Additionally, there are virtually no investment restrictions with an ESA. And similar to the 529 plan, funds not used for qualified education expenses are subject to both taxes and a 10% penalty, but ESA beneficiaries can be changed at any time.

However, ESAs have a much lower contribution limit than a 529 Plan. You can only contribute up to $2,000 to any one beneficiary assuming you meet the ESA income limits. And the total of all contributions to all ESAs set up for one beneficiary cannot exceed $2,000. So if you and your child’s grandparents open an ESA, make sure that the combined total of contributions in one year does not exceed $2,000.

As for the income limits, a couple filing a joint return for tax year 2015 can contribute $2,000 if their modified adjusted gross income (MAGI) is less than $190,000 a year. The ability to contribute is phased out for couples filing jointly with MAGI of between $190,000 and $220,000. Contributions are not allowed for couples filing jointly whose MAGI is $220,000 or above.

Single taxpayers will be able to contribute $2,000 if their MAGI is less than $95,000. Single taxpayers’ ability to contribute is phased out if their MAGI is between $95,000 and $110,000. No contributions are allowed if their MAGI is $110,000 or above.

UGMA/UTMA Custodial Accounts

The Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) are types of custodial accounts that are set up by an adult on behalf of a minor. All of the money in these accounts is turned over to child once they reach the age of majority (18 to 21, depending on the state in which the account was opened) and they can use the funds in any way they choose. You can contribute $14,000 per year, per child without incurring a federal gift tax.

There are a few benefits to UGMA/UTMA custodial accounts, mainly the multitude of investment options and no limitations on contributions. However, unlike the 529 plan, UGMA/UTMA custodial accounts are not tax-deferred and the overall taxation can be a little tricky. The first $950 of earned income from investments in a UGMA/UTMA is generally tax-exempt. The subsequent income up to $950 is generally taxed at the child’s rate. Any income earned over $1,900 is generally taxed at the parent’s rate.

And then there’s the whole control issue. Once the child is a legal adult, they can do whatever they want with the investments. So while you may have hoped your child would use the money for college, there’s no guarantee they’ll be responsible with the funds.

Investment Accounts

You can also put money away for college in a brokerage (investment) account with somebody like Betterment or Vanguard. This gives you the most investment options (like mutual funds or individual stocks) and control over the assets. Plus, there are no contribution limits. But then you’ll have to pay federal and state taxes on the earnings each year.

Your Roth IRA

Yes, a Roth IRA account is generally used to save for retirement, but you can pull out your contributions to pay for college and just pay the tax on any gains. And keep in mind, you can only contribute $5,500 to a Roth IRA per year as of 2016 (or $6,500 if you are over the age of 50), subject to income limitations.

Savings Accounts

Sure, you can always put money away for college in a savings account, but the returns are very, very low. Though one benefit of checking accounts, savings accounts, money market deposit accounts, and certificates of deposit is that they’re covered by the FDIC. , up to $250,000 per depositor, per insured bank, for each account ownership category. If you do decide to use a savings account, an online bank like Ally or CapitalOne 360 will offer slightly better returns than a regular brick and mortar bank.

If you’re interested in setting up a college savings plan for your child or create a comprehensive financial plan, I’d love to work with you!

Now that you’ve compared your income and expenses to your values, it’s time to set specific goals that align with your values and vision. And it’s OK if these values and goals change over time. It’s better to start working towards a goal and need to pivot than do nothing at all.

For example, our major financial goal about five years ago centered around saving money for a 20% down payment on a house. After buying our first house, our financial priorities shifted towards financial independence so that we can spend more time with our family. The best definition I’ve read of financial independence comes from Matt Becker of Mom and Dad Money (he’s also a fee-only financial planner). He says financial independence is, “The freedom to make decisions based on what makes you happy instead of what makes you money.”

When you’re financially independent, you can choose to spend more time with your family, traveling, or volunteering. Obviously you can still choose to work, but I’m guessing it’ll be more fulfilling than a standard 9-to-5 job or it may be at reduced hours.

Setting SMART Goals

As you create SMART goals for saving and spending, really think about what you are you working towards. Why is money important to you?

Specific

How much do you need to save? And don’t just say “I need to save more.” What is “more?” If you don’t have a specific amount in mind, how will you know when you get there? You probably have a good idea of the price tag based on your vision, say a down payment of $50,000.

Measurable

Dollars are pretty easy to measure, but what happens when your “vision” dollars start to mingle with your “needs” or “wants” dollars? In order to properly measure your savings, it’s best to create a separate savings and/or investing account. Capital One 360 or Ally Bank are great options for very short-term goals since they’re online and offer a higher interest rate than a brick and mortar bank.

Once your goals move a little further out, even just two to five years, it’s better to invest your money using a platform like Betterment. You can create a conservative portfolio using a higher allocation of bonds than more volatile equity securities to minimize risk and earn a higher return than a standard savings account.

In both cases, it’s best to create automatic transfers into your “vision” savings/investing account. You’ll be less likely to pull from your savings for an impulse purchase. And with automatic transfers, you won’t even miss the money if it’s not available to be spent.

Attainable

Your monthly savings goal should be reasonable. Set yourself up for success. No need to drive yourself into the poor house trying to save for something enjoyable (i.e. European vacation). To stay motivated, set aside an amount that’s not too far out of reach. Personally, we’ve cut out a few extra frills by dining out less frequently and bringing our lunches to work. But we don’t deprive ourselves and still enjoy a fresh cup of blueberry coffee from Dunkin’ Donuts or a latte from Starbucks.

Realistic

At the same time, your goal should be a little bit of a reach so that you’re willing to work towards it. That makes accomplishing the goal even more worthwhile. So set the bar high enough for a satisfying achievement!

Timely

Set a timeframe and mark the date on your calendar. Again, be specific, not just “in the next 5 years.” And be realistic. Automatic transfers are another way to stay timely. Schedule transfers for once or twice a month so you won’t forget to stash the cash.

Being SMART

An easy way to track your progress is by using Mint.com’s goal tool. It’s as easy as entering your goal, setting a date, and linking a savings or investing account. You then know how much to save each month, which can be factored into your budget. Mint will email your progress every month and offer savings advice, though some of those tips and recommendations are promotional/affiliate links. Betterment has a built-in goal tracking function if you’re saving/investing through them.

You can obviously track everything in an Excel spreadsheet or on a piece of paper, but I like the convenience of having everything online. That way you can access the information on the go and make changes as necessary.

Don’t be afraid to take ownership of your finances! The best way to become financially independent is to learn about the different resources and tools and ask questions!

Last week, Elite Daily ran the “article”/opinion piece “If You Have Savings In Your 20s, You’re Doing Something Wrong.” I’m cringing just typing that. Based on the writer’s byline, I was hoping the “article” was just satire (a la The Onion). But considering many members of Gen Y/Millennials get their news from sites like these, I figured I’d take this piece seriously.

Basically, the writer thinks that anyone saving money in their 20’s is boring. Why worry about tomorrow (let alone 10 or 20 years down the line) when you can enjoy today and post it on Instagram? #yolo She also seems to have a narrow-minded view of money in that it can only serve an either/or purpose of saving or spending. Heaven forbid we have a balanced approach of enjoying and saving money! MarketWatch shared their own response in “Why Saving Money in Your 20’s is Actually Self-Indulgent” and I’d like to share my response as well.

I’ll preface this by saying that I’m a saver by nature. (And I’m 31, so apparently it’s OK for me to be boring now.) I grew up in a household of accountants and entrepreneurs and money wasn’t a taboo topic. It’s also extremely helpful that my husband shares a similar view of money and is also a saver. We are both extremely fortunate that our parents saved for our college education and we both graduated from college (including a Masters degree for me) without any debt. We bought our house in our late 20’s and have a plan to pay off the mortgage early since we’ve been responsible with our money. I realize this isn’t everyone’s upbringing and current financial situation.

I can see the writer’s point in that you shouldn’t have to suffer while saving money, but to encourage readers to “[Not] save money. Make more money” only gets half of the equation right. Yes, making more money can allow you to do more fun things, but do you want to be a slave to your job? Or to credit card debt?

The writer balks at saving $200/month in the hopes of earning a $60,000 pay raise. Obviously a $60,000 pay raise is huge, but even a one-time raise of $10,000 with a 3% annual increase, 5% savings rate, and 8% investment return compounded over 40 years results in $754,012.60 additional earnings. And it sounds cliché to mention compound interest again, but investing $200/month over 45 years can bank you $1,000,000.

And finding an additional $200 per month might not be as hard as it sounds. I recently shared in the XY Planning Network consumer newsletter how 1% of your day can save hundreds of dollars:

1% of your day is only 15 minutes. Here are a few things you can tackle in about 15 minutes to save a couple hundred dollars or more over the course of a year:

Check if your employer offers any discounts on cell phones, gym memberships, insurance, etc. and have them applied to your current services

I’m not the only one who found this “article” to be a bit absurd. Kelly Whalen of The Centsible Life points out that, “a few bucks extra in a savings account now means whenever a catastrophe happens (illness, fender bender, family member that needs help, friends in need) you can actually afford to take time off to care for yourself and others who need it or donate to that cause you care about. Balance isn’t about fear, it’s about being prepared for whatever life throws at you.” Since we have an emergency fund and additional savings, we can weather unexpected car or home repairs. And I’ve been able to take a few additional weeks of unpaid maternity leave without worrying about bills.

And as Ramit Sethi of I Will Teach You to be Rich points out, living a rich life is about “spend[ing] extravagantly on the things you love…as long as you cut costs mercilessly on the things you don’t. Sure, saving is important, but if you can afford it and you want it, shouldn’t you be able to splurge to buy it — every once in a while?” Want to travel the world? Go for it! You’ll just have to prioritize your expenses and/or earn more money (sound like some of my previous blog posts?) since consumer debt is never fun.

Lest you think I’m boring and just sit in the dark while counting my pennies; I do like to drink craft beer while watching cable. And we like to go out to fancy dinners for birthdays or our anniversary. Cutting costs elsewhere has allowed us to go deep sea fishing on our honeymoon in Mexico and spend a long weekend at a bed & breakfast for our anniversary. We also bought a new Honda CR-V with cash and I can take a risk by starting this business.